The Bush administration's decision to withhold up to $300 million in Indian housing funds came under fire on Wednesday.

Key members of Congress questioned why the Department of Housing and Urban Administration appeared to be punishing nearly every single federally recognized tribe by denying them access
to their money. They suggested a legislative fix may be needed to prevent what tribal housing leaders predicted would be a total disaster.

"Whew," said Sen. John McCain (R-Arizona), the chairman of the Senate Indian Affairs Committee, after being told that $300 million, nearly half of the entire Indian housing block grant program, was being withheld from over 500 tribes.

"It seems to me that would lend some urgency to resolving this situation," he added.

Sen. Byron Dorgan (D-North Dakota), the vice chairman of the committee, agreed. He said HUD was going overboard by tying up the entire program over a lawsuit filed by just one tribe.

"I understand that you may have to recalculate [housing grant awards] but I assume you could create reserves that would allow you to do that and at least distribute some portion of the housing funds," he said.

Tribal housing leaders drove the same point home during the hearing and at a briefing following the hearing. Marty Shuravloff, the newly elected president of the National American Indian Housing Council, said some tribes may have to stop building homes altogether as a result of
the administration's move.

"This potentially is going to affect every tribe in the country," said Shuravloff, a housing director from Alaska whose tribe won't be able to access $4 million in the coming year unless HUD changes course.

"They could potentially be looking at closing their doors," he said of other tribes across the country.

Orlando Cabrera, the assistant secretary in charge of public and Indian housing, did not dispute the gravity of the situation. "The impact is that there currently are no awards, no money going to any of the tribes," he told the committee.

But he said the lawsuit forced HUD to suspend the entire program because a federal judge invalidated a key housing regulation. In a May 25 decision, the judge said the way block grant funds are distributed under the Native American Housing and Self-Determination Act (NAHASDA) is unfair to tribes.

"This particular order throws the entire formula into question," said Cabrera of the ruling.

Not everyone buys that explanation. Susan M. Hammer, the executive director of housing for
the Ute Tribe of Utah, accused the administration of trying to "pit tribes against each other" after losing the lawsuit.

"It's just seems unfair that they are restricting funding to all tribes," she said via telephone during
NAIHC's briefing. "To punish us all for an adverse position ... it just doesn't seem right."

The lawsuit at issue was filed by the Assiniboine and Sioux Tribes on the Fort Peck Reservation in Montana. The tribal housing authority had received block grant funds in order to "provide affordable housing for low income families," the judge's decision sated.

HUD claimed that the Fort Peck Housing Authority received excess funds under the NAHASDA regulation. A 2003 letter stated that the tribe "received overfunding" in excess of $1 million over a five-year period.

After losing an administrative challenge within HUD, the tribes went to court. U.S. District Judge Richard Matsch examined NAHASDA and the HUD regulation, and found that the regulation has
a "perverse effect" on tribes seeking to increase Native American homeownership rates.

"The housing needs of people living on an Indian reservation are not reasonably determined by a formula" in the regulation, he wrote in the 19-page decision.

"As a result, tribes with large numbers of homeownership units suffer decreases in their share of the annual apportionment, and tribes with a large percentage of rental units receive a greater
share each year," he wrote in describing the funding inequity.

Cabrera said HUD is trying to find a way to resolve the situation. The Department of Justice has asked for a stay but he said the judge isn't likely to grant it. The case could conceivably go to the 10th Circuit Court of Appeals.

HUD officials were meeting with Senate staff to further discuss the situation. McCain said he hoped a solution could be reached before the case goes any further.

"Probably's not good enough," he said after Cabrera indicated Congress might not need to step in.